Indian light vehicle market to cross the 4 million unit mark in 2016

According to a forecast report by PwC Autofacts, India’s light vehicle production (including cars, utility vehicles and light commercial vehicles will drive sales, taking production to 4.1 million units this calendar.

For the first time in history, India’s passenger vehicle production is expected to cross the 4 million units mark in 2016.

Indian light vehicle market to cross the 4 million unit mark in 2016

According to a forecast report by PwC Autofacts, India’s light vehicle production (including cars, utility vehicles and light commercial vehicles will drive sales, taking production to 4.1 million units this calendar. Exports too are likely to hit the 700,000 units mark this year also riding on small utility vehicles. The report pegged that India’s light vehicle production will hit 5.8 million units by 2020 and 6.5 million units by 2022.

The report suggested that with expected GDP growth of 7.5% and “consumer confidence the highest since pre-global recession levels “the overall outlook is positive and production figures are expected to be slightly above 4.0 million units for the first time in history”.

Light vehicle sales in India, it said, are showing a positive development in the second quarter of (calendar) 2016. “After a weak start, sales growth is almost on the par with 2015 levels. Though passenger cars still have the highest volumes of all segments, other segments like utility vehicles (+25.3% YTD through June) and light commercial vehicles (+ 12.3% YTD through June) are driving the current sales increase,” said the PwC Autofacts report.

In exports, passenger car share has come down from 79% in 2015 to 71% in 2016 with utility vehicle share going up from 12% in 2015 to 20% in 2016. “Though there is optimism with assembly expansion through exports and increase in sales, there are still signs of insecurity,” said the report.

The auto industry is sitting on 2.7 million units of excess capacity which is expected to rise to 3 million units by 2017 and will only come down to 2013 levels of 2.2 million units in 2022 said the report.

Abdul Majeed, partner, PwC, said, “With all the positive indictors to support the growth and improved customers sentiments Indian automotive industry is poise for growth this year and growth might move further if GST reduce overall tax burden on the vehicles from next year, how OEM make themselves relevant with changing customer preferences is the key for success.”